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Investing In Stocks
Investing In Only One Stock - One Is Seldom Enough
Investing in only one stock
can be a risky move. Many financial advisers would instantly tell
you to diversify your investments. The saying “don't put all your
eggs in one basket” best exemplifies this situation and the reason
behind it. If that share falls, then it's all over for you.
However, there are people who made a fortune by investing in only
one stock. There are only a few of them, though. The odds of making
it big by putting your fate in just one share are very slim. Some
even say that your chances of winning the lottery are just the same
as being successful by having only one kind of stock in your
portfolio.
Investing in only one stock pays if you have the
right investment manager.
Franklin Otis Booth, Jr. is the only passive investor to make it on
the Forbes 400. He amassed his fortune by throwing $1 million in
Berkshire Hathaway (NYSE: BRK-A). His shares are now worth $1.4
billion.
Otis Booth's incredible achievement in stock investing is not
entirely of his own doing. Of course, the fate of every investor
lies on the financial managers that run the company on which he
placed his money in. Fortunately for Otis Booth, Berkshire Hathaway
is managed by a renowned financial expert, Warren Buffet.
Investing in only one stock may seem worth it if the company is
being managed by very competent persons. However, it is very
difficult to find the likes of Warren Buffet. Even if you're lucky
enough to find a very able manager, there's still a possibility that
he may not be able to bring the company to success, especially if he
is hindered by causes that are beyond his means or capacity to
solve.
Investing in only one stock doesn't mean that you have to be idle.
Even if the profits are good, there will come a time when you have
to move on and try another investment. Investing in only one stock
can indeed bring you fortune if it is performing well, and it would
seem to be an unwise move to let go of it if it is still at its
peak.
However, stocks will eventually dip. It is therefore important to
prepare for this contingency. You don't even have to wait for your
shares to fall before you abandon them. It would be more beneficial
for an investor to be constantly active, shifting from one strong or
promising investment to another.
This would enable him to take advantage of the
strong performances of the various shares in the market. Active
investing will also insulate him from being vulnerable to the
possible or eventual slides of a particular share that comes over
time.
Investing in only one stock is not the only way to get rich.
While passive investment may do wonders if you have the right
stocks, the safest way to create wealth is still by putting up your
own business. Majority of those who got in on the Forbes 400 list
achieved their prominence by working hard to improve and expand
their respective ventures.
Once you already have a company of your own, make it public. Who
knows, your company might convince some that there is nothing wrong
in investing in only one stock.
Managing Your Stock Portfolio |
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